Pure Advantage was founded in 2011 on the conviction that New Zealand is in a global race for green growth — and we cannot afford to slip behind.

Since then, not enough has happened—and, in certain respects, things have only got worse. In 2011, for example, the Global Green Economy Index (GGEI) had New Zealand ranked number one in its assessment of 27 of the world’s leading economies. By 2012, we had slipped to sixth. In 2014, we were ranked 18th among sixty survey countries.

The aim of this discussion paper is to get us back in the race for green growth. It takes the view that we shouldn’t be a “fast follower” in the transition to a low-emissions world. Rather, we should be a “canny leader”—that is, we should follow where we must, but lead wherever we can. Because by leading on issues that affect us most, we gain disproportionately from finding solutions.

An example of canny leadership is our leading role in the Global Research Alliance on Agricultural Greenhouse Gases. But this isn’t the only area we should be canny leaders on. Another is trees.

This discussion paper sets out to show the economic and environmental benefits of expanding our forests. Whatever is meant by “green growth” and the “green economy”, it will involve an economy that readily recognises the value of trees and has the capacity to expand forest stocks accordingly. And by focusing on trees, we bring simplicity to the complex issues that trees impact upon, whether through diversifying our economy, improving water quality, protecting biodiversity, or making a meaningful contribution to climate change.

Executive Summary

The economic and environmental challenges we face today are wickedly complicated and global in scope. As an organisation, as a person, it can be hard to know what to do. That’s why we need to focus on the parts of these problems, on the parts where we know we can make a difference.

One part is trees. This discussion paper makes the case for how we can make our country wealthier, and how we can secure our nation against various risks, by expanding our forests.

(Chapter I) The take-home message is this: It is in our national interest not only to start planning for “our forest future”, but to start planting our future forests now.

(Chapter II) Yet we are currently heading in the opposite direction. New Zealand is trending toward net deforestation—that is, we are cutting down more trees than we are planting. We are going against the grain of good environmental sense and the spirit of responsible stewardship.

(Chapter III) So this report shows that trees create a range of personal, material, and economic benefits. These benefits enhance personal wellbeing, improve natural assets like soil and water quality, and create diverse economic opportunities.

(Section IV) Moreover, these benefits fall upon not only forest owners, but also surrounding communities and future generations. Once we take these wider interests into account—that is, once we take the perspective of the national interest—we see why good environmental sense makes good economic sense too.

(Section V) By contrast, to undertake net deforestation invites risks to New Zealand’s resilience and prosperity. These avoidable risks include degradation of our environmental assets, getting offside with currents in international climate politics, and lost economic opportunities by failing to transition to a more sustainable, more prosperous forestry industry.

(Chapter VI) Accordingly, this report calls for a national forest strategy. It calls for the creation of long-term plans to establish future forests that cover 1.3 million hectares of New Zealand, to offset our agricultural emissions and to position New Zealand on a feasible course for a net-zero greenhouse gas emissions future.

(Chapter VII) This report proposes focusing on three priority areas: erosion-prone land, waterway margins, and urban forest. Although this is ambitious in scale, these are all areas where the benefits of forest are multiplied due to the environmental co-benefits or, in the case of urban forest, population density.

(Chapter VIII) This report also recommends four principles of action: (1) expansion, (2) permanence, (3) appropriate diversification, and (4) guardianship. In other words, we need to expand our total forest cover, prioritise permanent forest or permanent land use for forestry, embrace the diversification of forest stocks to reflect local circumstances and landowner preferences, and bolster our guardianship of new and existing forests from pests and other threats.

(Chapter X) This report then maps out the complex space in which tree-planting occurs by drawing on various combinations of capital, labour, and land. Mapping out this afforestation space makes clear that shortage of capital is the greatest obstacle to new forest planting. But it also sheds light on how we could increase capital flows to tree-planters, particularly by strengthening the relations of responsibility between polluters and anti-polluters, between those degrading our natural assets and those enriching them.

(Annex I) Finally, this report discusses the elephant in the room: the Emissions Trading Scheme (or ETS). This complicated policy mechanism, currently under review, was supposed to shift capital from polluters to anti-polluters by creating a carbon price—yet it has failed to incentivise afforestation as it was supposed to. Accordingly, this report recommends making the ETS accountable to its outcomes, so that we start to ask not what the forests can do for the ETS, but what the ETS can do for forests.

The nub of it all.

“We forget that we owe our existence to the presence of trees. As far as forest cover goes, we have never been in such a vulnerable position as we are today. The only answer is to plant more trees—to plant trees for our lives.”Richard St. Barbe Baker (1889–1982), legendary British forester and husband to New Zealander Catriona Baker (née Burnett) of Mt Cook Station’s founding family.

This discussion paper sets out to tell a story that hasn’t been adequately told. The story goes like this…

It is in New Zealand’s national interest to plant more trees than it presently does. This isn’t just a matter of preference or taste. It is a matter of good economic and strategic sense.

To plant trees is to cultivate a resource that enhances national value, that creates diverse economic opportunities, and mitigates a variety of future costs. We ought to think of expanding our national forest as an investment into New Zealand’s long-term prosperity and resilience. Trees are gifts to future generations, taonga, whose utility we cannot perfectly quantify, but can safely anticipate given existing scientific and economic knowledge.

Presently, though, we are heading in the opposite direction: New Zealand is trending toward net deforestation. Various recent statistics spell this out:

According to Ministry for the Environment, our rate of forest removals since 2008 has been greater than our rate of forest planting, averaging around 8,500 hectares per year (see below).1

Global Forest Watch puts our net loss of tree cover between 2001–2014 at 139,793 hectares, more than four-fifths of the size of Stewart Island. 2

The 2015 Environment Aotearoa report, using land cover satellite imagery, found that between 1996 and 2014 we lost more than 10,000 hectares of native forest and regenerating forest.3

To carry on as we are, to keep on cutting down more trees than we plant, imposes a range of risks upon future New Zealanders: our children, our grandchildren, perhaps even our future selves. To reverse this trend, however, to expand our forests stocks, will generate a range of co-benefits whose impacts will trickle down through New Zealand society, including cleaner rivers, reduced erosion, and diverse economic opportunities.

Afforestation and deforestation in New Zealand (hectares)

On Māori and their Ngahere.

This paper assumes the perspective of New Zealand’s national interest. But it is important to note that the interests and aspirations of Māori— as tāngata whenua, as New Zealand’s indigenous people—are uniquely important. We can only ever say that New Zealand is doing well if Māori are doing well, and what Māori need to do well is not always identical to what other New Zealanders need. In regards to forests or ngahere, the special relevance of Māori is partly a logistical matter. Already, 40 per cent of forested land is Māori-owned, including forested assets worth over NZ$2 billion. These assets may increase as the Waitangi Tribunal process continues.

Moreover, when it comes to future forest land—that is, the land that would benefit from afforestation—a substantial proportion is either privately owned by Māori, or owned by ahuwhenua trusts, Māori incorporations, or iwi. It is estimated that Māori land amounts to around 1.5 million hectares, with 80 per cent in agriculture. Some of this land will be erosion-prone, making it especially advantageous for reforestation (see §8.1).

But the relevance of Māori to forestry is not only logistical. It is also a matter of value.

Māori values forge a unique attachment to the land and also recommend certain ways of engaging with the land and its resources. The value of kaitiaki is the best known, particularly in its active form of kaitiakitanga, which is typically translated into English as “guardianship” or “stewardship”. More broadly, it refers to the “inherent obligation we have to our tūpuna [our ancestors] and to our mokopuna [our descendants]; an obligation to safeguard and care for the environment for future generations.”

For Māori, kaitiakitanga sits within a wider notion of interconnectedness, whereby both living and non-living things are understood to share mauri, a common life force. Damage to the mauri of one thing will result in damage to the mauri of related things. This means that the deterioration of a physical environment will result in the spiritual deterioration of a people connected to that land.

This notion of interdependence, of taupuhipuhi, is highly relevant to Māori forest management. It supports the practice of not only caring for forests, but also utilising their resources. This differs from Pākehā traditions of land management which tend toward the binary: land is either cleared outright or reserved entirely for conservation. Historically, this has been a source of tension for Māori, not only because of the harms caused by deforestation, but also because of the prohibition of sustainable harvesting of conservation land.

How to manage our existing conservation forests is beyond the scope of this report. But it is worth mentioning that, in regard to our future forests, there are potentially fruitful convergences between the ideal of kaitiakitanga and the practices of sustainable forest management, which aim to strike a balance between environmental benefit and economic opportunity. Not only are these strategies important for empowering Māori to improve their economic situation through their land and forest assets, it is also attractive to investors and prospective forest owners if new forests are seen to be economically self-sustaining.

Deforestation: what’s at Stake?

“We’ve never had a culture of forestry in this country. We’ve had a culture of cutting trees down and turning them into timber. But of forestry, of care for the forest, we’ve never had it.”—Keith Stewart in the 2011 film “Song of the Kauri”.

New Zealand’s historical deforestation is substantial. No less than 70% of New Zealand’s original forest area has been lost since prehuman times as a result of burn-off, clearance, and logging.4

To some extent, this historical forest loss is understandable, because people didn’t know then what we know now about the material impacts of deforestation. In hindsight, though, it’s obvious that a lot of land in New Zealand should never have been cleared in the first place.

First of all, deforestation heightens our vulnerability to various kinds of environmental damage and degradation, such as hillside erosion, flood incidence, soil deterioration, and poorer water quality. From a national perspective, these damages incur all sorts of costs—clean-up costs, degradation of assets, lost economic opportunities, reduced productivity, compensation costs—that impact upon the national balance sheet.

Secondly, deforestation puts New Zealand off-step with international trends in climate politics. By losing trees, we undermine our capacity to reduce our net emissions of greenhouse gases, because we reduce our total carbon sinks. If the world gets serious about climate change—and after COP21 in Paris all signs point in this direction—then New Zealanders could find themselves going against the grain.

Thirdly and finally, our trend toward deforestation has implications for New Zealand’s economy. Not only does it imperil the clean green national brand that adds value to New Zealand goods and services, it also hinders our timber industry by narrowing future wood supply. This is off-putting to investors, yet it is their capital we need to transition to a smarter, more sustainable, value-added forestry sector.

There is more to say about these risks—see Chapter VI —but first we need to say something about where we’re heading and why.

Why Deforestation?

The primary explanation for our net loss of forest is economic. Forestry is not economically viable for landowners in the way that other land uses are, particularly dairy farming. This goes not only for permanent forest planting, but also for commercial forestry. All too often, the numbers simply don’t add up.

The latest Deforestation Survey of commercial forest owners estimates that around 8,000 hectares was deforested in 2014. By asking forest owners’ future intentions, the survey also found that: “Total intended deforestation by all owners is estimated as 67,000 hectares between 2014 and 2025.” Large-scale owners plan to deforest 39,000 hectares, whereas small-scale owners plan to deforest 28,000 hectares. 5

Intended land use conversion by forest owners for period 2014-2025

Source: Bruce Manley. ‘Deforestation Survey 2014’. Report Prepared for the Ministry of Primary Industries, (Christchurch NZ: School of Forestry, University of Canterbury, February 2015), 10.

Clearly, agriculture is perceived to be the more profitable land use. Not even the recent dip in dairy prices will necessarily deter forest owners from conversion. One survey respondent declared: “One year of low dairy prices has not changed our perception of longer term trends.”6 Whether that optimism endures depends on what happens to dairy prices in the next few years. But the broader problem is clear: growing forest simply isn’t seen as prosperous in the long run, neither as a substitute nor a supplement to agriculture.

On the flipside, our Emissions Trading Scheme (ETS) has failed to reset the fiscal balance in favour of trees. A 2013 survey found that, among 85 foresters, none believed that the ETS drove any new planting.7 For most of the lifespan of the ETS, the price of carbon credits was far too low to incentivise the planting of permanent or commercial forests. But this was supposed to have been one of the ETS’s more concrete outcomes.8 Instead, the ETS has overseen a shift away from land-uses that lower New Zealand’s net greenhouse gas emissions (like forestry) toward land-uses that increase net emissions (like dairy farming). This is the double-whammy of our trend toward deforestation: we’re losing carbon sinks and gaining methane sources. (For a more detailed discussion of the ETS, see Annex.)

One cynical response is to say that this simply shows that trees aren’t valuable enough. Not even a fancy policy instrument like the ETS can overturn the harsh realities of price. But the next two sections overturn this cynicism by showing that the value of trees simply aren’t recognised.

Trees and their benefits.

My dearest Ulmus. As I was leaving St. Mary’s College today I was struck, not by a branch, but by your radiant beauty. You must get these messages all the time. You’re such an attractive tree.—An anonymous email sent to an elm tree as part of Melbourne’s Urban Forest project.

It’s not unusual, especially in this country, to be sentimentally attached to trees. A pohutakawa in bloom is the essence of the northern summer. The mighty kauri and totara can stir a patriotic pride usually reserved for the All Blacks. The southern beech forests have a smell and feel without comparison.

What is increasingly becoming understood, however, is that trees have benefits that even the most hard-nosed accountant could appreciate, benefits that are scientifically verifiable and fiscally significant. This is the focus of the “ecosystem services” literature, which makes explicit the benefits provided by trees and other ecosystems by virtue of their presence and natural processes.9 Local applications of this approach are drawn on below. 10

One important thing to say about these benefits is that they are not always captured, or not captured solely, by land- or forest-owners. For instance, someone who undertakes riverside planting may see none of the benefits that those downstream do, in terms of improved water quality, flood mitigation, and so on. The same goes for the negative impacts of removing trees: this can be economically advantageous for landowners even when it is costly for downstream water users. Economists call these downstream costs and benefits “externalities”, because they are “external” to the immediate calculations of the relevant economic decision-maker. Downstream costs are “negative externalities” and downstream benefits are “positive externalities”.

It is partly in recognition of these positive externalities that trees not only generate benefits for owners, they can also attract rewards from the wider community.11 In other words, people who value trees will recognise and support the planting of trees by way of payments, donations, subsidies, awards, pro bono labour, or more complex arrangements such as carbon markets. Given that anyone who plants trees can attract rewards of this kind, these are worth highlighting, not only to bring attention to the compensations that already exist, but to get people thinking about how communities can support land uses that generate ecosystem benefits (more on that in Chapter X).

Personal Benefits

Personal benefits are the moral, cultural, spiritual, artistic, sentimental, and health-related reasons for planting, growing, and conserving trees. These include:

a concern for the interests and wellbeing of future generations;

fulfilment of kaitiakitanga duties;

a love of nature and/or belief in nature’s intrinsic value;

a sense of responsibility for the consequences of one’s actions;

a concern for home, for one’s sense of place or whakapapa;

a tribute or dedication to a loved one;

an aesthetic appreciation for green environments;

formal recognition of conservation services through honours or awards;

recreation and leisure opportunities;

the physical exercise and community engagement from volunteer conservation;

local climate regulation by influencing air temperature, solar radiation, and rainfall;

wind breaks and shelterbelts for stock;

enhanced water quality through filtration of nutrients and reduced run-off carrying nitrogen, phosphorous, and sediment;

flood mitigation and moderation of peak water flows;

filtration of airborne pollutants;

sequestration of greenhouse gases, such as atmospheric carbon and agricultural nitrates;

enhanced biodiversity by providing habitats such as forest canopy, shaded waterways for river life, and “green corridors” between existing habitats;

pest regulation for adjacent agricultural land by providing habitats for predators.

Economic Benefits

Economic benefits are the cash transfers and avoided costs that New Zealanders obtain from trees. Some of these are rewards, in the sense that they are payments for environmental benefits. These include:

the use of trees as raw material for commercial activities, such as production of timber, horticulture, pharmaceuticals, nutraceuticals, biofuels, genetic resources, and other bioproducts;

commercial activities that utilise forest ecosystems without using trees as raw material, such as mānuka honey or sphagnum moss, or tourism and recreation enterprises;

the added value to products and services in New Zealand from a “clean green brand” supported by healthy forests;

eligibility for public funding or provision of services, such as the QEII National Trust, Nature Heritage Fund, Ngā Whenua Rāhui, Afforestation Grant Scheme, East Coast Forestry Project, and so on;

eligibility for private funding or provision of services, such as philanthropic donations, commercial sponsorship, or pro bono work;

the accumulation of carbon credits to be sold on voluntary carbon markets, or through compliance markets like New Zealand’s Emissions Trading Scheme;

reduced national liabilities through the production of domestic offsets for greenhouse gas emissions;

reduced public expenditure as a consequence of trees’ positive impact on health and wellbeing;

increased house or land prices as a result of trees on the property, or within the vicinity.

Putting on a price tag.

Given that New Zealand is sliding toward net deforestation, despite the obvious rewards of forests, one response is this: “To hell with cost-benefit analysis! Landowners are so obsessed with relative prices that they can’t see the wood for the trees!”

Yet another response is to say that cost-benefit analysis hasn’t gone far enough, that too much is being neglected from economic consideration. On this view, we’re taking the benefits of trees for granted, because we forget to consider the costs we incur by losing our forest stocks, even though these costs count against the profits we might anticipate from cutting them down for timber or agriculture.

This is a key concern for research programmes like The Economics of Ecosystems and Diversity (or TEEB). It treats our forests as one element of our nation’s natural capital—that is, “a renewable flow of goods and services that underpin the economy and provide inputs and direct and indirect benefits to businesses and society.”12 From the TEEB perspective, “failure to incorporate the values of ecosystem services and biodiversity into economic decision making has resulted in the perpetuation of investments and activities that degrade natural capital.”13

In sum, by degrading our forests assets, we undermine the renewable resources that our economy relies on for its prosperous functioning.

So how can we take these wider costs and benefits into consideration? The table below draws from existing studies to give an idea of what such valuations look like.14

Rewards and Benefits

Ecosystem Service

Valuation

Authors

Personal

Willingness to pay for improved provision of habitat for native species in public forests.

NZ$95 per year per household.

Yao and Kaval (2010).

Willingness to pay for recreational opportunities in planted/native forests.

These valuations are indicative, not comprehensive. This partly reflects the need for further research. For example, there is no study yet that calculates the total human health benefits of New Zealand’s forests. However, international research suggests that this sum would be significant. A UK study estimated that British forests generated £1.44 billion in human health benefits.15 Similarly, a study of Toronto, Canada, found that having ten more trees in a city block, on average, improved residents’ perceptions of health in ways that were comparable to an increase of personal income of CAD$10,000, or being seven years younger.16

But the incompleteness of ecosystem service research also speaks to the difficulties of pricing certain things. For example, how do we reliably price our future liabilities for carbon offsets when we cannot know the future price of carbon?

It also speaks to the absurdity of pricing certain things. For example, to put a price on one’s love of nature only shows that you don’t really know what love is. Although metrics like “willingness to pay” provide an indication of how people value their desires, these metrics are also prone to subjective influence and misrepresenting the complexity of peoples’ actual motives.17

All of which returns us to the question: Is cost-benefit analysis even appropriate?

The dilemma is an old one, captured in Oscar Wilde’s famous dialogue:

Cecil Graham:“What is a cynic?”

Lord Darlington:“A man who knows the price of everything, and the value of nothing.”

Cecil Graham:“And a sentimentalist, my dear Darlington, is a man who sees an absurd value in everything and doesn’t know the market price of a single thing.”

The prudent path clearly lies somewhere between cynicism and sentimentalism. We shouldn’t expect everything to have a price. Nor should we need to price something to value it in our decision-making. No one lives their life this way, so it would be weird for politics to try.

Nevertheless, price helps bring attention to value, and it can help to navigate the unavoidable trade-offs involved in land-use decisions. After all, for anyone whose land is their livelihood, whose land is their principal source of income, decisions around price can make or break them. It is not enough to simply point to the sentimental value of trees if forest owners are converting their land due to economic necessity. The threat of short-term insolvency, not only the prospect of short-term profits, is behind the current trend toward deforestation.

However, by bringing to light the externalities of land-use decisions, we are encouraged—as a nation—to retrace the lines of responsibility between actions and their consequences. It encourages us to ensure that forest owners are fairly rewarded for the positive impacts of the trees, even when those impacts are felt beyond the fence-line. (This is what the Emissions Trading Scheme was supposed to do for carbon sequestration—yet has failed so far to achieve.) And the opposite is also true: the idea of externalities encourages us to ensure that responsibility falls where it should whenever land-use decisions impose costs upon others.

One thing that would help to account for externalities is national metrics that measure New Zealand’s green growth. This is defined in a Pure Advantage report, prepared by Vivid Economics and the University of Auckland Business School, as “growth which maintains or improves wellbeing while staying within ecological constraints.”18 It recognises that, by straying beyond ecological constraints, by diminishing natural assets like forests and waterways and clean air, we undermine wellbeing in ways that won’t show up, or won’t show up immediately, in conventional measures of economic growth.

Of course, the idea of a green growth index has been kicking around for a while now. In 2011, the Green Growth Advisory Group proposed a Green Growth Dashboard for New Zealand with a range of indicators including economic growth, natural asset stocks, resource and energy productivity, environmental quality of life, innovation, and green infrastructure.19 This would provide a far richer account of national wealth than conventional measures like GDP (Gross Domestic Product), which only represents the total dollar value of all goods and services in New Zealand. With this narrow focus, GDP externalises other crucial dimensions of national wealth and fails to register the depreciation in value of natural assets, even when those depreciations could impact upon GDP over the long-term. Aspects of this wisdom are informing Treasury’s development of a Living Standards Framework, which includes measures of natural capital.

Without signals like this, however, our nation’s economic decision-making is severely blinkered. It is prone to choices that aren’t in the long-term national interest, that invite unnecessary risks and problems with long gestation periods. To these we now turn…

Deforestation: a portfolio of risks.

What haunts any benefit is the risks that hide in its shadows. By lapsing into a trend of deforestation, not only do we risk missing out on the benefits of forests, we also put ourselves at risk of various personal, material, and economic setbacks. To put it bluntly, we make ourselves vulnerable to unintended (if often highly predictable) consequences.

In regards to our forests, these risks fall into three domains: the environment, international climate policy, and our national economy.

1. Risks to Our Environment.

In terms of the environment, it isn’t only that we’ve got something to gain by planting trees, we also have something to lose by not planting trees.

These setbacks are the inverse of the material benefits listed earlier, including increased erosion of hillsides and riverbanks; impoverishment of soil quality through reduced organic matter and loss of soil substrate; degradation of water quality through unimpeded run-off of agricultural effluent and eroded soils; higher peak water flows and incidence of flooding; reduced air quality through diminished filtration; endangered biodiversity due to fewer habitats for forest fauna; and the multiplication of risks related to global warming, including droughts, fires, wind storms, and other extreme weather events.

Not only is this bad for the environment, it is also bad for people, because these physical impacts have follow-on effects for personal and economic wellbeing, whether through public health problems, reduced productivity, diminished community resilience, or costs to fix the problem.

Let’s look at an example: erosion. Empirical science supports the common-sense view that landslides and soil erosion are made more frequent by deforestation—although other factors such as slope angle, rainfall, and soil strength are relevant.20

One New Zealand study found that forest cover reduces the risk of landslide by 90%. Scrub cover does so by 80%.21 So, by failing to reforest clear-felled land, by trending toward net deforestation, New Zealand increases the geographical area that is at risk of erosion.

As it stands, the scale of erosion-prone land in pasture is vast. A 2007 Ministry for the Environment report put this at 1,140,367 hectares—that is, 4.25 per cent of New Zealand’s total land area.22 You only need to look out the window of a flight over the central North Island, or take a drive around the East Cape, to see the pale scars where erosion has gnawed away at ridgelines and gullies.

The cost of soil erosion is substantial. Scientific studies put it at NZ$127 million in 2001, revised upward to around NZ$200 million annually in 2011.23 Another problem is slips and landslides, where peven single events can have an enormous fiscal impact. Most of the $70 million-worth of damage caused by the 2015 “weather bomb” in the Taranaki/Horizons regions was from erosion on sheep and beef farms. Of the 870,000 hectares affected by landslides, some 66,000 hectares in the region suffered from severe landslides. This impacted on 460 farms, with thirty farms facing over $500,000 damage each.24

This is a drag on the national economy—but it could be mitigated by strategic tree planting. Even sparsely planted trees on unstable land can reduce the risk of landslides.25 But for erosion-prone land that is also marginal (that is, unavailable or unproductive for grazing), permanent or commercial forest could be the most profitable use. Admittedly, the cost of afforestation at this scale is bound to be significant. But, from a national perspective, this upfront cost must be balanced against the avoided annual costs of erosion that stretch indefinitely into the future.

And these aren’t the only costs that could be mitigated. For example, the cost to insurers for flood damages from 1995–2004 was NZ$247 million (excluding government compensation payments). 26 More recently, in 2015, the cost to insurers for weather-related events was around $115 million, much of it flooding, which includes $50 million for the “weather bomb” discussed earlier.27

Could these costs be mitigated by afforestation? Perhaps. Although the effect is variable, there is evidence to suggest a link between forest cover and peak river flows.28 For example, a New Zealand study comparing pasture, native, and pine forest catchments found that native forest catchments yielded the lowest stormflows and lowest peak flows for the rivers that flowed through them.29 There is good reason therefore, to treat trees as an ingredient of national resilience against future flooding, both under standard expectations and worsened expectations under climate change.

A related issue is water quality. On this issue, the scientific literature is largely in agreement that the presence of forests in river catchments improve water quality, particularly by reducing the run-off of sediments and nutrients from surrounding land.30 This is especially advantageous in catchments where land-uses, such as urban development and intensive agriculture, have a negative impact on water quality. Given the widespread conversion of forestland to dairy pastures, the latter is particularly relevant.

A recent attempt by Foote, Joy, and Death to quantify the costs of removing nitrates from drinking water estimated a lower limit of $1.7 billion and an upper limit of $10.7 billion annually.31 Importantly, this assumes the cleaning up of all waterways, not only those waterways that surpass recommended nitrogen limits. This aspect of the paper was controversial—but it is worth noting that criticisms of the article focused on specific assumptions like this, not the more general idea that dairying carries unaccounted-for environmental costs.32

We can, however, approach the problem from the opposite direction by tallying up the costs of existing clean-up projects. The Ministry for the Environment’s nine clean-up projects of polluted lakes and rivers—which includes Lake Taupō, Rotorua Te Arawa Lakes, and Manawatu River—are costed at $272.6 million. To this, the Crown is committing $122.2 million, with further funding coming from district and regional councils, landowners, and industry stakeholders.33 In a similar vein, the Department of Conservation has partnered with dairy mutual Fonterra for the Living Water project, involving a $20 million investment fund for riverside planting.34

Yet this leaves a question mark over whether the scale of existing clean-ups is equivalent to the scale of the problem. In other words: Are the costs of current clean-ups anywhere close to the cost of the clean-ups that ought to be undertaken? Probably not, which means that the cost of remediation will fall to future generations. What makes that more unfair is that, as noted elsewhere, the “avoidance of such extensive damage in the first place would certainly have been much more cost-effective.”35 The strategy of pollute-now-clean-up-later is also blind to the problem of irreversible change, such as species extinction, which no amount of money can bring back.

Herein lies the frustration: The degradation of our natural assets could be easily mitigated, if not avoided, by devising and implementing a smart, strategic land-use policy.

Our land use could be set into better harmony—at the national, regional, and local levels—so that the negative impacts of agriculture are mopped up by the presence of plants, trees and forests.

This will require many New Zealanders to go beyond binary thinking about land use as either forest or pasture, and to think instead about how different land uses can be woven together through farms and landscapes, like the diverse latticework of tukutuku or flax weaving. In this way, trees will always be nearby, providing the material benefits that count among agriculture’s foundational inputs, especially by providing rich, carbon-infused soil and reducing soil erosion. This is a basic insight of agroforestry and soil farming—which is a topic for another day.36

The key point is that this report is not proposing an either/or of agriculture versus forest. It is proposing a model of balance, of yin-and-yang, where New Zealand softens the negative impacts of agricultural pollution, while also sustaining New Zealand’s domestic food supply and agricultural export opportunities. To an extent, we can have our cake and eat it too (except in the most severe cases of agricultural intensification) by working to reduce the delayed and hidden costs of agriculture.

Happily, there are movements in this direction, yet these are often accompanied by a lack of urgency. For instance, the deadline for riparian planting within the 2013 Sustainable Dairying: Water Accord is not until 2030. And these commitments aren’t always evenly distributed; for example, there is not yet an accord among sheep and beef farmers to fence off waterways and undertake equivalent planting. Accordingly, New Zealand remains stuck between knowledge and action—that is, we understand the problem and, increasingly, its costs and risks, yet we carry on delivering outcomes that are suboptimal from the national perspective.

Risks to Our Climate.

“There was a time when Mount Cook Station land ran right up to the Tasman Glacier, New Zealand’s largest glacier. The Tasman Glacier is retreating at a frightening pace as a result of global warming and there is no doubt that things are very dire for the whole planet. However, I still have faith that the extraordinary people around the world who are dedicating their lives to saving the planet by halting deforestation, will bring about the change that will save the planet.”- Catriona Baker (née Burnett), 1917–2014, member of founding family of Mt Cook Station, and daughter of founding National Party Member of Parliament, Thomas David “T.D.” Burnett.

In this day and age, most people know about the risks of global warming, even if they don’t believe that these impacts will occur in their lifetime. These risks include loss of snow and ice, rising sea levels, ocean acidification, and greater incidence of extreme weather events like cyclones, rainstorms, and heatwaves.37

For a problem as wickedly complicated as climate change, there is no simple route between cause and effect. Of course, that doesn’t stop newspapers from onoccasionally reporting that a certain flood or drought has been “caused” by climate change.38 But we can say that climate change is a “risk multiplier”—or, in the words of a PricewaterhouseCoopers report, climate change “adds to complexity… [and] amplifies or alters existing risks”. Given the interconnectedness of our economic and environmental systems, the “resulting shocks on the global supply chain can be severe and persistent.”39

Predicting the economic costs of global warming is inevitably highly speculative. But such predictions tend to be ominously large. A 2015 Citigroup study, for example, analysed the costs of climate change in terms of cumulative lost GDP, estimating this to be US$44 trillion globally, or 0.7%–2.5% of global GDP, by the year 2060. 40

Another way to price the impacts of climate change is through the social cost of carbon—that is, the price we should pay to avoid the damages that each tonne of carbon dioxide is expected to produce. The US Environmental Protection Agency, for example, uses the social cost of US$36 per tonne (NZ$55.60) to inform its decision making.41 But a recent analysis by Stern and Dietz estimated that, depending on the scale of damage anticipated, the carbon price should be US$32–103 per tonne (NZ$41–131) and should rise to $82–260 by 2035 (NZ$104–331) to avoid warming of more than two degrees above pre-industrial levels.42

Not everyone will go along with this, of course. There are still some people who deny the risks of anthropogenic global warming because they deny its scientific reality, even though this hypothesis is not rejected by the vast majority of climate scientists.43 But scientific facts are not the only relevant facts:

It is a political fact that institutions around the world are increasingly committed to transitioning to a low-emissions economy. This alone could be costly for nations that fail to keep up with the transition.

In Paris on December 12th 2015, the international community took the highly significant step of agreeing to a collective long-term target of “well below 2°C above pre-industrial levels, and to pursue efforts to limit the temperature increase to 1.5°C” (Article 2.1[a]). This was reinforced further by a goal of net-zero global emissions by “the second half of this century”—that is, sometime between 2050 and 2100 (Article 4.1). Given that New Zealand is party to the Paris Agreement, we invite the risk of political and economic sanction for failing to meet those targets, or for failing to pursue those targets with integrity.

This political accord was accompanied by a hardening of resolve among finance and business leaders. An important catalyst is the issue of stranded assets, particularly Carbon Tracker’s estimation that, to stay within 2°C warming, capex in fossil fuels worth US$2.2 trillion would need to be forfeited.44 To put the same point differently, 60–80% of existing fossil fuel investments will be written off as stranded assets as the fossil fuel market shrinks to fit a 2°C carbon budget.45

These are mind-boggling figures, with sombre ramifications for the global economy. This was acknowledged recently by the Bank of England’s governor, Mark Carney, in a speech to Lloyd’s of London in September 2015. He warned that “a wholesale reassessment of prospects, especially if it were to occur suddenly, could potentially destabilise markets”. If investors wait to respond to events rather than shift their investments pre-emptively, he argued it “may already be too late”.46

New Zealand’s 2050 target will only take us partway to the Paris Agreement target of net-zero emissions by the second half of this century. Our 2050 target is to reduce net emissions to 50% below 1990 levels by 2050, which leaves an overhang of around 33.4 million tonnes of CO2e annually. If we can’t cease these emissions, nor offset them domestically, then New Zealand will need to purchase carbon offsets offshore to meet the Paris target of net-zero emissions. (See graph below.)

Greenhouse gas total emissions, net emissions, and net removals from LULUCF from 1990-2013, and future projections to 2020 and 2030.

Source: Ministry for the Environment, ‘New Zealand’s Greenhouse Gas Inventory 1990-2013’, (Wellington, NZ: Ministry for the Environment, April 2015); & Ministry for the Environment. New Zealand’s Second Biennial Report under the United Nations Framework Convention on Climate Change (Wellington NZ: Ministry for the Environment, 2015).

Given the uncertainty around future carbon prices, we can only speculate on what those future liabilities would cost. The BusinessNZ Energy Council, in a recent analysis, assumed a carbon price of between NZ$60–115 by 2050, which would translate to a cost of around NZ$2–3.8 billion annually to purchase enough carbon offsets to reach net-zero emissions.47 This is a major financial risk to willingly impose upon the next generation.

Worse still, it isn’t at all clear how New Zealand could even meet its 2050 target. Far from going down, New Zealand’s net greenhouse gas emissions have risen by 42.4 per cent between 1990 and 2013.48

Yet this future liability is technically avoidable. New forest planting can’t take us to net-zero emissions alone, but it can play a key role in a multi-dimensional response. For example, if we were to miraculously plant 1.3 million hectares of land in Pinus radiata tomorrow—a slightly larger land area than what’s already classified as highly erosion-prone—then the annual sequestration rate for this new forest would be equivalent to our 2050 overhang of 33.4 million tonnes of CO2e.49 If this future forest is additional to whatever else New Zealand does to reduce its emissions to half of 1990 levels, then we would sequester enough to reach net-zero emissions by 2050.50

To put much the same point differently, forestry expert Mark Belton has calculated that we could offset the next fifty years worth of greenhouse gas emissions from livestock farming by managing around 12 per cent of New Zealand’s 11 million hectares of pastoral land—again, around 1.3 million hectares—as high carbon density permanent forests.51

Given that agriculture contributes almost half (48%) of New Zealand’s total greenhouse gas emissions, this would be no small victory.

Of course, some will say that investment into carbon sinks is wasteful because there is no guarantee that by 2050, say, there will exist an international climate regime with powers of enforcement. If our liabilities are too demanding, New Zealand could simply walk away, like it did in 2012 by not committing to the Kyoto Protocol’s second commitment period. However, it is also possible that future institutions will be more robust and more severe than existing institutions. This is especially likely if the burdens of climate change are bearing down on global society. Moreover, the absence of multilateral institutions doesn’t forestall the possibility of bilateral action, where nations directly punish other nations through trade, diplomacy, or hard power. In sum, uncertainty over future institutions is no antidote to risk.

Others will say that technology will save the day. Undoubtedly, technology will play a role, yet a recent University of Oxford paper concluded that trees are our safest bet in the short term. It examined afforestation alongside other “negative emissions technologies” (or NETs) such as ocean fertilisation, carbon-capture-and-storage, and direct air capture.

But it found these more radical forms of geoengineering to be riddled with risks and uncertainties: Will they work? Are they affordable? What will the unintended consequences be? Afforestation, by contrast, is a “no-regrets NET” because of the minimal uncertainties, multiple co-benefits, and low upfront capital costs. That’s why the paper describes afforestation—along with soil carbon improvement and biochar—as “the most promising NETs between now and 2050.”52

To sum up, planting trees alone cannot save us from global warming, but nor can any other single response. Rather, tree planting will be an essential part of a combined response, reliably buying us time in our carbon budgets while we make the tricky technological and economic transition into a low-emissions economy.

Risks to Our National Economy.

You can gauge a country's wealth, its real wealth, by its tree cover.-Richard St. Barbe Baker

Our clean, green image is not only a part of New Zealand’s national identity, it is also what consumers expect from our export goods. Our environmental reputation adds value to our exports and remains a key incentive for both international and domestic tourists. Our trend toward deforestation puts this at risk, not only because deforestation is itself a sign of environmental impoverishment, but because it impacts negatively on other markers of environmental integrity, such as water quality and greenhouse gas emissions.

Unfortunately, there is a lack of recent research on the value of New Zealand’s clean, green brand. But a 2001 survey of Malaysian supermarket shoppers found that if they perceived a deterioration of New Zealand’s environment, they would purchase 54% less dairy products on average. Generalized to other Asian, African, Indian, and Middle Eastern export markets, this would amount to an annual loss of $241–569 million (in 2001).53 The same report also asked tourists the extent to which they would reduce their stay under worsened environmental perceptions, calculating these reductions to be worth between NZ$530–938 million to the New Zealand economy. In sum, if irresponsible dairying does eventually degrade overseas perceptions of New Zealand’s environmental health, it not only risks undermining the dairy industry as a whole (including responsible dairy farmers), it also risks undermining New Zealand’s other major source of revenue: tourism.

Although no similar study has been conducted since, given changes in consumer appetites over the past fifteen years, especially growing demand for organic and eco-friendly products, it is highly plausible that New Zealand’s clean green brand is more valuable than ever, strengthening our advantage among conscientious consumers. Environmental deterioration creates a risk that hovers over all New Zealand goods and services that are leveraging off our “100% Pure” national brand.

The sector most directly affected by deforestation, however, is commercial forestry. Given that the majority of national forest loss involves the conversion of forestland to farmland, this is reshaping the capacity and potential of the forestry sector. Of course, no one is better placed to articulate these challenges than the forestry sector itself, so this section will mostly focus on positioning existing strategy within the wider context of the public good.

As the price of milk remains low, it is clearer now than ever that a smarter, more profitable forestry sector would enhance New Zealand’s economic resilience.

At the national and regional level, even at the level of individual farms, greater economic opportunities from trees would diversify our revenue streams, easing our economic vulnerability to fluctuations in global demand for agricultural commodities. An emboldened forestry sector would also create economic opportunities where those opportunities are needed most: in regional and Māori economies.

Finally, from an environmental perspective, it is worth noting that commercial forests provide many of the same ecosystem benefits that conservation or permanent forests do, whether in terms of land stabilisation, reduced runoff, even providing habitats for native birdlife.54 While these benefits are complicated by the disruptions of commercial rotation cycles, especially where clear-felling is involved, there are ways to mitigate those harms, not least through forestry management regimes that avoid clear-felling altogether. As long as environmentally responsible practices are encouraged, from without and within the forestry sector, then commercial forests have an important role in making New Zealand’s economy a greener economy.

The sector is already attempting to steer itself in this direction. In 2012, the Wood Council of New Zealand (Woodco) published its strategic plan for the sector. On a business-as-usual scenario, it saw export earnings rising from $4.5 billion in the year ended June 2011 to $6.1 billion in 2022.55 On this path, there is a continued reliance on unprocessed log exports, exposure to market volatility due to lack of product diversity, inefficient infrastructure, and a declining capacity for solid wood processing due to lack of new investment.

However, Woodco proposed an alternative path, based on the strong promotion of wood, pursuit of diverse export markets by expanding domestic processing capacity and manufacturing streams, increased new investment, and a collaborative and aligned industry sector. Under this scenario, Woodco expects export earnings to double to $12.3 billion in 2022.56

More ambitious scenarios are also available. A report by Vivid Economics and University of Auckland Business School projected that, if we were to almost double our plantation forests and obtain the same high returns as Finland’s forestry sector, then total output could reach $41 billion or higher.57

But the necessary ingredient for realising any such scenario is greater investment, especially to upgrade New Zealand’s outdated, inefficient mills.

The same goes for any shift toward the emerging bioeconomy. Forest research centre Scion recently highlighted these opportunities by noting that renewable chemicals markets are projected at US$59 million in 2015, while the bioproducts sector is forecast to expand to €200 billion by 2021.58 Similarly, PricewaterhouseCoopers put the annual value of additional opportunities in sustainable forestry globally at US$100–300 billion by 2050.59

Given our existing advantages in forestry—in terms of expert knowledge, forest stocks, and room for plantation expansion—New Zealand could claim a big piece of that pie, vigorously pursuing the manifold opportunities of the bioeconomy. The recent Woodscape Study by Scion and Woodco shows that two standout areas for strong returns and value-enhancement are (1) engineered wood products (especially CO2 modified wood and wood fibre composites), and (2) fuels and chemicals. Meanwhile, the product that our forestry industry relies on most—logs for export—sits at the bottom of the value scale.60

Not only would shrewd investment enable New Zealand to expand that value-added industry, it would also improve the general state of green investment in New Zealand, which is by far our weakest link in existing green growth indexes. For example, the Global Cleantech Innovation Index 2014 notes that New Zealand is “well below average on emerging cleantech innovation”, dragged down by its low venture capital activity.61 Similarly, on the Markets & Investment dimension of the latest Global Green Economy Index (GGEI), New Zealand “received the lowest score of any OECD country. This extremely low score on the perception survey should be a call to action for leadership there… While the country appears to be firmly recognized as a green country brand in a broad sense, outreach in the future should focus more on business opportunities related to the green economy in order to better educate global markets.”62 A smart forestry sector could do much to reverse that reputation.

Yet a major obstacle to investment is New Zealand’s erratic wood supply.

The 1990s saw a boom in forest planting which will produce a bulge in supply when these trees reach maturity from the early 2020s onwards. This so-called “wall of wood” will make an additional 10 million cubic metres of logs each year available for harvest.63 And although a sustained increase in wood supply might encourage new investment, this bulge in supply will be followed by a pinch from the mid-2030s onwards, a by-product of New Zealand’s current trend toward deforestation. (See below.)

New Zealand Radiata Pine Availability Assuming Harvest at Thirty Years

This is hardly encouraging for investors. As Woodco notes, “security of supply is often cited as a barrier to investment in wood processing”.64 But these supply projections also reveal something more fundamental: our incapacity as a nation to reduce uncertainty, to willfully manage our plantation forests in a way that generates optimal outcomes. This is discouraging to the private investors who could enable the transition to a smarter, more productive, more sustainable forestry industry. Yet without such investment, the only other way to enable this transition would involve government assuming the role of investor.

What is required is the exercise of strategic choice, the setting of broad parameters to guide the country’s future direction, to lift us from our situation of passively rolling along. As Woodco put it, “It is not a sensible or winning strategy to do nothing and just wait to make the best of what arises.”65

It is also widely recognised that a more willful, more responsible approach to New Zealand’s future will involve both business and government. This is generally the case for forestry, given the long time horizons for investment; but it is especially the case for New Zealand forestry, because the sector is dominated by large foreign companies that don’t necessarily have a stake in New Zealand’s national interest. The involvement of government is one way to involve the public’s interests in long-term decision-making. There are already positive examples of collaboration between government and the forestry sector such as the Bioresource Processing Alliance, the WoodScape study into wood processing investment opportunities, and the Future Forests Research into species diversification. Yet the challenges still facing the forestry sector—only partly touched upon here66—show how much work there is to be done.

How forestry supports a green economy—and how it could do more in New Zealand.

From an environmental perspective, permanent forest is the “gold standard”. Nevertheless, commercial forest has a crucial role to play, because of the scale of commercial forests in New Zealand and the opportunities for revenue for landowners. When it comes to arresting the trend toward deforestation, commercial forestry will do much of the heavy lifting. Fortunately, the choice between permanent and commercial forest is not zero-sum from the point of view of the environment. Roughly speaking, the material benefits of a newly planted commercial forest are equivalent to those of a newly planted permanent forest. It’s only when the rotation cycle ends, when mature trees are cut down and replaced with new forest stock, that the environmental disadvantage of commercial forest shows.

Consider the example of atmospheric carbon. Although trees store carbon when alive, they release carbon when cut down. This is why Simon Terry and Geoff Bertram (2010) emphasise the importance of permanent forest for carbon sequestration: “Growing trees in production forestry plantations offers only a temporary respite [for meeting emissions targets], akin to buying the groceries on a credit card. When in due course the trees are harvested, the debt must be paid off.”

While this is true under certain carbon accounting rules, in reality, not all carbon is emitted when trees are cut down. First, a good amount of carbon remains sequestered in the soil. (This is excluded from standard carbon accounting given the uncertainties of measuring it.) Still more carbon remains on site as leftover stumps and large woody debris. (Manley and Maclaren, 2012). (This is accounted for under New Zealand’s ETS, but not the EU’s.) Still more carbon stays sequestered as harvested wood products such as construction timber, or sequestered in landfills as responsibly managed waste (Colombo et al., 2008; Belton, 2010; & Manley and Maclaren, 2010).

(This is excluded from Kyoto carbon accounting, even though long acknowledged by IPCC research.)

Moreover, the carbon sequestration potential of commercial forests can easily be increased through strategic forest management, such as (1) restocking forestry land, (2) increasing overall forestry stocks, (3) using longer rotation cycles, (4) adopting continuous cover forestry regimes, and (5) employing low-impact, low-energy harvesting methods that reduce carbon release. These kinds of sustainable forestry methods would also enhance other environmental benefits, while avoiding the negative environmental impacts of clear-felling. Admittedly, this could result in delays or reductions to revenue, but a responsible national strategy would compensate for this through payments for environmental benefits. For example, a respectable carbon price would reward carbon sequestration through the Emissions Trading Scheme. Other mechanisms could reward other environmental benefits, such as land stabilisation or improved water quality.

It can also substitute construction materials that have a higher embodied energy or carbon footprint. (Mason and Manley, 2013).

In this sense, forestry reduces net greenhouse gas emissions simply by adjusting the composition of the economy.

Finally, while there is resistance toward monocultures like Pinus radiata, there is potential to diversify our forest stocks. There is already research into species like Douglas fir, eucalypts, and cypress species; but there is also unrealised potential for native tree plantations under investigation by research organisations like Tāne’s Tree Trust and Scion. A recent study of six sites in Northland by Scion (Lania Holt et al., 2014) demonstrated that kauri and mānuka generated positive economic returns in all sites, even surpassing Pinus radiata. Such research points the way to afforestation models that are environmentally and economically sustainable, while also supporting the cultural preferences of Māori (if not also Pākehā).

Towards a national forest strategy.

So far, this discussion paper has shed light on the importance of trees for New Zealand, on the rewards to be won and the risks to be avoided. What is needed now is action. We need to turn what we know into what we do.

This discussion paper cannot finalise the solutions alone. Ultimately, this will require the input and engagement of key stakeholders—government, landowners, forest owners, Māori organisations, and conservation groups—because it is these organisations that possess the resources and decision-making capacity to reverse New Zealand’s trend toward deforestation.

The obvious platform is a national forest strategy.67 Ideally, this would cover the full breadth of New Zealand’s forests—from conservation forests, to commercial forests, to the future forests that we need to start planting. But this exercise must go beyond simply chasing consensus among key stakeholders. It must strive to take a national perspective, to take seriously the risks and rewards of afforestation and deforestation and how these impact, directly and indirectly, on all New Zealanders. It must also be bold and ambitious, to match the national scale of the problem of net deforestation.

Given the time-scales involved, it must also strive to account for the interests of future New Zealanders, to envisage what their needs are, and what they might reasonably expect from decision-makers in the present. Given the depth of present knowledge about natural systems and our growing capacity to make evidence-based predictions, we are responsible to future generations in a way that no generation has been before. Scientific and technological progress reinforces a long-standing ethic of responsibility, captured neatly in conservative philosopher Edmund Burke’s famous remark that society is “a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born.”68 This is especially true for trees, of course, because certain species take beyond a human lifetime to even reach maturity. Accordingly, a national forest strategy must bring these long-term interests, this sense of inter-generational purpose, back into our decisions about land use.

Although it would be unwise to finalise this strategy without formally engaging stakeholders, some recommendations are general enough, or obvious enough, that it is possible to articulate them here. This report identifies three priority areas, four guiding principles, and a map of existing planting projects in terms of land, labour, and capital.

Three priority areas.

Once we identify the risks of deforestation and the benefits of afforestation, it becomes clear that we stand to gain more from planting in some areas than others. Three priority areas for future forest land are obvious: erosion-prone land, waterway margins, and urban forest.

1. Erosion-Prone Land.

As discussed earlier, the Government identifies 1.1 million hectares of erosion-prone marginal land as appropriate for planting. The national benefits of reforesting this land are dramatic: We alleviate the costs of erosion and landslides. We create carbon sinks at a scale of national significance. We create economic opportunities for land that was already marginal and unproductive.

Relevant planting projects do exist. The Afforestation Grant Scheme, which provides public money for 15,000 hectares of new forest by 2020, gives priority to applicants with erosion-prone land. However, even if it succeeds, the Scheme will solve only 1.36 per cent of the 1.1-million-hectare problem it identifies. A similar scheme, the East Coast Forestry Project, which focuses on erosion-prone land in the Gisborne district, would deal to just 6.45 per cent of the national problem once complete.69

These projects are laudable—but we should have concrete plans to reforest the entire 1.1 million hectares. Not only would this reduce the costs and risks of future erosion, afforestation at this scale could make a meaningful contribution to our net greenhouse gas emissions. For example, if, through some feat of national will, we planted those 1.1 million hectares in native trees tomorrow, we would sequester 318 million tonnes of CO2 by 2050—that is, an average of 9 million tonnes CO2 every year.70 That would get us about two-thirds of the way back to 1990 levels if our gross emissions remain at their current level.71 Alternatively, if we planted those 1.1 million hectares in Pinus radiata, we could sequester carbon at over three times that rate. Better yet, we could encourage mixed planting regimes that secure the best of both worlds, using fast-growing exotics to create a transitional forest for inter-planted natives (more on this below).

2.Waterway Margins.

Of the entirety of New Zealand’s rivers, some 425,000 kilometres, almost half run through catchments modified by human land-use. Specifically, 43% of our rivers run through agricultural land, 5% through plantation forestry, and 1% through urban areas.72 To reduce the impacts of these land uses on water quality, we ought to provide forested buffer zones around waterways. This is another priority area where tree planting has a significant impact, enhancing water security and avoiding costs of clean-ups and water treatment.

Echoing the Queen’s Chain, we could have a “Green Chain”, an aspiration to see all waterways lined with permanent vegetation. This is the level of ambition of Te Awaroa’s target of restoring 1,000 rivers by 2050. Other organisations, such as the Million Metres Streams Project, Sustainable Coastlines, and myriad other community organisations, are doing their bit to restore river habitats.

As for waterways in pastoral land, the 2013 Sustainable Dairying: Water Accord supports this ambition for waterways passing through dairy land that are more than one metre wide and 30 centimetres deep. However, full implementation of riparian management plans, which includes river margin planting, is not mandatory until 31st May 2030. Also, there is no equivalent commitment for non-dairy agriculture like sheep and beef farming. In the meantime, it falls to other incentives or educational programmes to encourage farmers to make a headstart in integrating forestry into routine farm management.

3. Urban Forest.

The value of urban forest comes partly from its capacity to ease the environmental pressures of urban pollution and urban life.73 But it also comes from population density, which means that the personal and material benefits of trees are multiplied. Any benefits to health and wellbeing, for example, will fall upon everyone in the trees’ vicinity, which has aggregative effects on demand for health services.

There are examples of leadership here. For example, Wellington City Council has a target of two million trees by 2020, supported by programmes like the provision of free trees for residents and community groups planting in public places.74 But these programmes aren’t widely known. Accordingly, there is space to upscale such efforts with a more ambitious, nationally unifying goal, which encourages other councils to raise their game. A good role model is Australia’s 202020 Vision campaign—that is, 20% more urban green spaces by 2020—created in 2013 with now over 300 partners in government and business.75

Four guiding principles.

In developing a national forest strategy, there are four principles that New Zealand ought to explicitly (re)commit itself to: expansion, permanence, appropriate diversification, and guardianship.

1. Expansion

As a matter of urgency, New Zealand must arrest the trend toward deforestation.

There ought to be an immediate commitment to the principle of no-net-loss of forest. To be credible, such a commitment should also be complemented by an obligation to plant permanent forest that offsets the net losses of any given year. This obligation falls most naturally on central government—but, given that the vast proportion of target land is in public rather than private hands, it could be displaced onto others through the use of direct incentives, or regulatory frameworks like the Emissions Trading Scheme, or other strategies.

More substantially, New Zealand should commit to a principle of net forest gain through ambitious but realistic mid-term targets. This could be specified in various ways: a commitment to planting a certain number of hectares of forest each year, or increasing forest cover by some percentage, or striving to meet per capita targets of trees (see ‘How many trees could we we plant? below).

Ideally, these mid-term targets would work toward an aspirational long-term target that is responsive to wider ambitions around water quality targets, erosion control, and the Paris goal of net-zero emissions by 2050. One such target is 1.3 million hectares of new forest before 2050. Indeed, if we were to plant trees at the rate we did in the mid-1990s—an average of 70,000 hectares from 1992 to 1998—it would take only 19 years to plant 1.3 million hectares of future forest.

A future forest of this size would be large enough to offset our agricultural emissions (at their present levels). It would also be large enough to close the gap between our domestic 2050 target and our commitments under the Paris Agreement. Significantly, the vast proportion of this goal could be achieved by simply reforesting 1.1 million hectares of highly erosion prone land that is costly and relatively unproductive.

How many trees could we plant?

Given that New Zealand’s commercial forests are around 1.7 million hectares, it is certainly technically feasible to plant a new forest of 1.3 million hectares. But is it possible to plant permanent forest at this scale? For argument’s sake, if we planted that 1.3 million hectares in native trees at 2,500 stems per hectare, we would require about 3.25 billion trees, or 700 trees for every New Zealander. (Actually, this overstates the effort required, because natural regeneration could do a lot of the work, if we planted diverse species to create a seed bank, then facilitated natural seed dispersal by protecting birds from predators). This would involve a massive, heroic effort—but it is not beyond the realms of plausibility:

China has overseen the world’s largest ever tree-planting project, the Three North Shelterbelt Project, to combat desertification, soil erosion, and dust storms. According, to China’s State Forestry Administration, this project has resulted in some 66 billion trees since 1978, or the establishment of 24,469,000 hectares of forest.

The United Nations Environment Programme’s (UNEP’s) Billion Tree Campaign was launched in 2006 with the objective of planting one billion trees. That objective was realised in November 2007 and, at the time of writing, 12.6 billion trees are registered as planted. Nearly 2 million trees are registered from New Zealand.

Kenya’s Green Belt Movement, founded by Nobel Peace Prize laureate Professor Wangari Maathai, has planted more than 51 million trees in Kenya since 1977.

In December 2014, the Australian Government announced plans to plant 20 million trees by 2020, pledging to distribute AUS$50 million over four years through a competitive grants scheme. This stands alongside the 202020 Vision target to increase urban forest by 20 per cent by 2020.

Since 1905, the Jewish National Fund (founded in 1901) has planted some 250 million trees in Israel, a territory that is only 8% of New Zealand’s total land area.

Toronto mayor John Tory promised in December 2014 to plant 3.8 million trees in the city of Toronto alone.

2. Permanence

The second principle is permanence. For a forest to produce enduring, substantive benefits for surrounding communities and ecosystems—whether in terms of water quality, land stability, soil enrichment, or provision of habitat—its continued existence over decades and centuries is key. In many cases, permanent forest will also entail native forest, if only because personal, cultural, and regulatory norms align against native forest being clear felled in future, thus ensuring its permanence.

This is not to cut commercial forestry out of the equation. But the fact is that the environmental benefits provided by commercial forests are disrupted by rotation cycles, especially when these involve clear-felling (see ‘How forestry supports a green economy—and how it could do more in New Zealand.’ in Chapter V). There is scope, however, to strike a balance between commercial forestry and the principle of permanence. To arrest net deforestation, it is enough to simply encourage permanent land use, rather than land use conversion. To amplify environmental benefits, however, it is preferable to encourage continuous cover forestry where appropriate—that is, selective felling in mixed rotation forests76—so that forest is both permanent and profitable. A national forest strategy could explore these and other possibilities.

3. Appropriate Diversification

In undertaking new planting, New Zealand should apply a principle of appropriate diversification. In other words, we should no longer presume to know what trees are best for each and every situation. A more nuanced, site-specific approach to afforestation needs to be part of any call upon landowners to plant more trees.

It is impossible to give justice to this issue here. But, to address one aspect, it is worth noting that the historical emphasis on Pinus radiata for farm forestry has had a mixed legacy. Many pine forests were optimistically planted to sequester carbon under the Kyoto Protocol and Emissions Trading Scheme, yet many landowners have been left dejected and disenfranchised (see Annex). Problems include the failure to achieve expected returns on investment, a lack of knowledge about forest management, the spread of conifer wildings, the hazards posed by elderly pines to stock and property, and aesthetic and cultural aversions to the presence of exotics. If government, or indeed any other organisation, pushed for large-scale pine planting, there would inevitably be scepticism, if not outright resistance.

Accordingly, when thinking about how to put permanent forest on erosion-prone land, most of which is privately owned and is often prohibitively remote or steep, it isn’t obviously the case that Pinus radiata is the most pragmatic option. Certainly, Pinus radiata is relatively cheap to plant, grows fast, and has well-known commercial outcomes. But personal aversions can be a decisive factor in land-use decisions, especially for people living on the land, or who want to create a positive legacy for family or community. And, ultimately, it is the trees that actually get planted that have the greater environmental impact, not just the trees that prove optimal in economic modelling.

There is a growing attraction to new native forest in New Zealand. However, the cost can be prohibitive, given that natives cost up to $20,000 per hectare, compared to $2–3,000 for Pinus radiata. However, it is possible to use exotics as part of a regime that transitions into native forest. In this regard, eucalyptus is especially promising, because it sequesters carbon at roughly the same rate as Pinus radiata, yet creates a sparse canopy that allows enough sunlight and rainfall through to sustain a second-generation of native trees planted between its trunks.77 Through this strategy, it is possible to strike a course between maximal carbon sequestration in the short-term, intermediate economic opportunities when eucalyptuses are thinned, and the eventual outcome of native forest. The principle of appropriate diversification will enable New Zealand to explore innovative regimes like this, to pioneer new regimes that address the novel challenges of landowners’ circumstances.

4. Guardianship

The last principle that needs to be endorsed—or re-endorsed—is guardianship. This has obvious points of overlap with the Māori idea of kaitiakitanga, but it resonates also with traditions of environmental stewardship from Europe and elsewhere.

Partly, this is a call to conserve what we have, to protect forests from things that degrade their value. For example, it has been estimated that if we were to remove the influence of pests, predators, and other disturbances from existing native forest and shrubland, then the carbon sequestered by trees and woody debris could rise by as much as one-third: from 1.5 to 2 billion tonnes of carbon.78 This also reduces the cost for new forest planting by bolstering a forest’s own natural capacity to regenerate itself through birds dispersing seeds.

But the focus of this report is not so much our conservation forests but our future forests. In this regard, the call for guardianship relates to the importance of aftercare for new plantings. For new plantings to be successful—that is, for saplings to survive to a robust age like, say, five years—significant work is required to prepare planting sites, to undertake weed control, and to defend against herbivorous pests. Although this is well-known to professionals, it isn’t necessarily known to everyone else. If the importance of aftercare—and guardianship more widely—is not understood, then a national effort to plant more trees will likely result in high mortality rates, miscalculations of the resources and labour required, and dispirited communities that underestimate their own capacity to effect change.

The afforestation space: labour, land, and capital.

So we need more trees in the ground. But any tree-planting project—except for those relying on natural regeneration—require an alignment of three basic ingredients: labour, land, and capital. 79

Which ones are holding us back?

We have already seen the vast scale of erosion-prone land that would benefit from afforestation. Clearly, land for tree planting isn’t lacking. Admittedly, much of this land is in private hands, so it can’t be reforested easily by the stroke of a politician’s pen. Fortunately, though, many landowners would plant if they could. One clear symptom of this unsatisfied demand is the backlog of applications for QEII National Trust covenants (discussed below). But what prevents private landowners from expanding their “green infrastructure” is the associated labour and expenses—for site preparation, for fencing, for purchasing good-quality saplings, for securing additional labour and equipment, for continued pest and weed control, for insurance where necessary, and so on.

Of course, labour shortages can usually be addressed if you have money to pay for contractors. But that only amplifies the problem of finding upfront capital. Voluntary labour is also available in some cases, by making arrangements with one of the 540-plus community conservation groups in New Zealand.80 Yet the conservation sector is finding itself increasingly fiscally constrained. Crucially, the continued underfunding of the Department of Conservation has not only diminished its own conservation capacity, but it is forcing the Department to chase funding from the same sources that community groups rely upon—namely, philanthropic donations and sponsorship from businesses. For public and community conservation, this means less funding and less secure funding.81

Clearly, the principal obstacle to new planting is shortage of capital.

Clearly, the principal obstacle to new planting is shortage of capital.

This raises a certain set of questions: Which sources of capital are underutilised? How do we increase total funds available? How do we reduce expenses, such as the cost of saplings? How do we create economic rewards for forest owners for the benefits of trees? What is the best way for business and philanthropists to contribute to national prosperity and resilience through the expansion of national forest assets?

It is highly doubtful, in this day and age, that there is any single funding solution. As it stands, the afforestation space is highly complex. The chart below is an interactive map of this afforestation space, which demonstrates how labour, land and capital combine together to create different kinds of tree – planting project. By clicking on the “example projects”, you will see how each project draws on different combinations of resources. But perhaps most important is what you don’t see: the combinations of labour, land and capital that haven’t been explored yet.

A national forest strategy will not only need to grasp this complexity, it will need to work with this complexity. It will need to facilitate connections between land, labour, and capital by redirecting resources where they are needed, by tapping into underutilised resources, and by identifying where competition for resources is creating inefficient outcomes. Rather than settle on one funding solution, we need to think about a smorgasbord of funding, an array of funding options that landowners can draw upon depending on their preferences and circumstances.

Below are some scattered thoughts on what we could do to expand this funding smorgasbord:

Increase capital flows between polluters and anti-polluters

The most general conclusion to draw is that, while the idea of externalities is increasingly commonplace, our national economy isn’t yet responding rationally to external costs and benefits. If our economy was rational in this sense—which is one way to be a “green economy”—we should see larger flows of capital from activities that degrade our environmental assets to activities that enhance them, such as tree planting. Instead, our economy continues to generate outcomes—degraded natural assets, avoidable costs, unnecessary risks, missed opportunities—that are irrational from a long-term national perspective.

The ethical thought underlying this is that people ought to be responsible for the consequences of their actions. This is the essence of the polluter-pays principle. In short, the costs of damages ought to fall upon those that create them—not upon their neighbours, their communities, or their grandchildren. And if the relevant parties don’t accept responsibility themselves, then we should expect society to find ways to hold them to account.

The ethical thought underlying this is that people ought to be responsible for the consequences of their actions.

Consumer pressure is one way to impose accountability—and businesses are increasingly conscious and responsive to those pressures. Take, for instance, the recent launch of Air New Zealand’s Sustainability Framework. Or the commitment by Anthony Healy, CEO of BNZ, to play “its role in the transition to a low-carbon economy”. Noting the influence of consumer pressure, Healy remarked that “customers are the new regulators”.82

Private capital flows to tree-planting projects already exist as part of carbon offsetting, corporate social responsibility exercises, and philanthropic donations. Certainly, there is room to expand these capital flows, to encourage businesses to contribute further to building national prosperity and resilience through tree-planting in priority areas. But, given the voluntary nature of such funding, there remains uncertainty over whether such funds will ever achieve the scale and reliability that enable conservation groups to operate most effectively.

Another way that society imposes accountability is through policy instruments. The Emissions Trading Scheme (ETS) is one attempt to internalise the costs of greenhouse gas emissions. It involves transferring capital from economic activities that create the problem, such as fossil fuel consumption, to activities that mitigate the problem, such as tree planting. But the ETS stands as a salutary warning that what works well on paper doesn’t necessarily translate smoothly into the real world (for discussion, see Annex). If the ongoing review cannot discipline the ETS into fulfilling its purpose of changing economic behaviour—and one indicator of success is the shift from net forest loss to net forest gain—then the ETS invites itself to be seen as part of the problem, rather than part of the solution.

One well-known alternative to emissions trading is a carbon tax. This could be a substitute to the ETS, or it could be additional. Multiple European countries—such as Ireland, Finland, Sweden, Norway, Denmark, Switzerland, the Netherlands, France, and the UK—have various shades and kinds of carbon tax while also operating under the European Union’s ETS. A less-well known alternative is an environmental consumption tax. This would involve a major reorganisation of our tax system…a shift away from taxing the production of private wealth… and toward taxing the consumption of public wealth”.83 Thus, rather than the focus of tax being income, company, and capital gains, the focus would shift to taxing the depletion of natural resources, impacts on biodiversity, and interruption of ecological function. Although this revenue would enter the general tax pool, tax-and-transfer policies could redirect this money toward payments for ecosystem services, thereby funding the expansion and maintenance of environmental assets through activities such as tree planting. Of course, this policy proposal relies not on consumers as “the new regulators”, but “the old regulator” of the state, which is bound to be politically controversial. Yet if consumer pressure and market-oriented solutions like the ETS cannot arrest the slide in environmental indicators, then it is highly likely that society’s expectations for environmental protection will fall increasingly upon government as the traditional defender of the national interest.

Reduce the costs of afforestation

Given that more people would plant if they could, one solution is simply to reduce the capital required for planting. Currently, the cost of planting native trees is up to $20,000 per hectare, compared to around $2,000–3,000 for Pinus radiata. A key reason for the difference is the industrial scale of pine nurseries, compared to the small boutique of most nurseries for natives. Creating economies of scale for natives and other trees will lower their price substantially. This will enable people to plant the trees they really want to plant, rather than avoid planting the tree species that they don’t want to live with.

Another way to reduce both capital and labour is to encourage natural regeneration. By trapping predators and by planting diverse species at the outset, particularly flowering trees that attract native birds, forest owners can create a fertile ecosystem that propagates itself. Exotic transitional forests like eucalyptus could also play a role here, providing comparatively cheap protection for native species to establish themselves under, while also providing a lofty sanctuary for birds from predators.

Climate bonds

There is not enough being done to build bridges between forests and finance.

Recently, with the collapse of oil prices and the growth of the fossil fuel divestment movement, talk has turned to the need to shift capital elsewhere, especially into low-emissions investments like renewable energy. Notably, during COP21 in Paris, a group of asset owners and investment managers overseeing a combined US$11.2 trillion of assets released a statement committing themselves to “scal[ing] up investment in green bonds, climate bonds and other bonds financing mitigation of and adaptation to climate change that meet out risk and return requirements as institutional investors.”84

Carbon sinks are another prospective investment, with the benefit of being “negative emissions”. Environmental impact bonds could provide upfront capital for new native forest planting, with returns for investors guaranteed by government for forest that is successfully established. This means that the private sector shoulders the risk and strives to find the most cost-effective route to clearly measurable outcomes, while the public sector walks away with a tangible asset. These bonds could also be engineered to enable non-public ownership, so that while government remains the ultimate backer, ownership of new forest can be deferred to landowners or Māori incorporations.

Expanding our system of covenants

Another partial solution is to expand our system of covenants. Although covenants aren’t appropriate for all situations, especially for Māori landowners, it is telling that the QEII National Trust is presently unable to keep up with demand. Although around 120 covenants are processed every year, another 50 or more are not.85

The Trust relies on $4.274 million from Government, with the average covenant costing $22,000 for fencing, surveying and administration. This, in turn, leverages substantial commitments of labour and capital from landowners as foregone income, fencing, weed and pest control, and so on. From 1977 up until 2015, the total protected land area stands at 181,346 hectares.86 By expanding this programme, by matching funding to existing demand, New Zealand could greatly expand this national asset.

Another important covenant for trees is the Permanent Forest Sink Initiative (PFSI). Rather than provide partial upfront capital, the PFSI was supposed to provide revenue in the form of carbon credits (NZUs). However, the PFSI is vastly under-utilised. Presently, there are only 61 participants covering 15,900 hectares, around 80 per cent in native forest.87

The major problem, of course, is that NZUs have traded at such poor prices that returns on investment aren’t significant enough to justify retiring the land, let alone to pay for upkeep, maintenance and insurance. The PFSI’s fate is tied to the Emission Trading Scheme’s, even though this wasn’t acknowledged in the “Proposals for Improvement” accompanying the recent PFSI review. One quick fix would be to create a premium Permanent Forest Unit, supported by a quota for surrender obligations under the ETS, so that even if the price of NZUs continues to languish, the demand and price for permanent forest offsets could be increased and stabilised.

Future forests need to be self-sustaining

It is inevitable that commercial forestry will be part of the solution to the current trend toward deforestation. This fact follows from the scale of land that requires afforestation, the widespread private ownership of available land, and current economic realities for landowners. It is the economics of land use—specifically, the expected value of agriculture over commercial forestry—that is the predominant driver of the current trend toward deforestation.

Fortunately, it won’t take much to reverse this trend—say, a price floor of $20 for carbon credits surrendered through the Emissions Trading Scheme. However the prevailing model of forestry comes with its own environmental and social costs, such as the impacts of clear felling and spread of conifer wildings.88 As discussed earlier, there is potential to diminish these impacts through new technologies, more sustainable forestry management, and the eventual development of native production forests. From a narrow short-term perspective, this could reduce or delay forestry returns; but from a national interest perspective, which includes the cost of externalities and negative long-term impacts, these strategies strike a better balance of national value.

This will involve, however, the blurring of familiar categories. In New Zealand, we tend to think of native forests as conservation forests, as protected under an ideal of “look but don’t touch”. This ideal won’t change any time soon for our old-growth forests. But, in this era of fiscal rectitude, our future forests need to be economically self-sustaining. That is, forest plans need to attract substantial investment to reach the requisite scale, and they need to be able to pay for their own maintenance and upkeep. This will require exploring all economic opportunities, including selective felling that retains the integrity of the surrounding ecosystem, or interplanting with exotic species to create short-term revenue opportunities.

We need in this country a discussion over the ethics of forests. It will take a lot of work to make permanent native forests economically sustainable, not least through the creation of economies of scale, the introduction of payments for ecosystem services, and the development of new products and markets for new native timber. But by embracing functional flexibility, we will ensure that our future forests have as many opportunities as possible for generating revenue. This multi-functionality doesn’t need to be mandatory, particularly for conservation projects that specifically strive for habitat restoration. But when we’re talking about afforestation at the scale of one-million hectares or more, there needs to be reasonable opportunities for revenue to be at all feasible.

Fortunately, in New Zealand, we have an indigenous ethic, kaitiaki, that permits the utilisation of forest resources while taking responsibility for any impacts on the surrounding ecosystem and future generations. This ethic could serve as the foundation for management of future forests, to ensure that these forests are both environmentally and economically sustainable.

This will require support from New Zealanders generally, as the first port-of-call for early investment, market demand for forest products and services, and electoral support for relevant policies. It will also require a more purposeful engagement between forestry and government, with both sides committed to maximising the good that forestry can do, and rewarding it accordingly. The ETS was supposed to achieve this—yet it has frustrated many in the forestry sector, especially small-scale forestowners and permanent forest growers.89 It will likely require substantive gestures from government to repair those relations, such as the introduction of a reasonable price floor for carbon, the recognition of carbon sequestered in harvested wood products, pledges of early adoption for forestry products like biofuels, or subsidies for timber housing in recognition of low-emissions construction. Above all, it will require the government to make firm and unwavering commitments—beyond the volition of party politics—to reward the forestry sector for environmentally sustainable outcomes, so that foresters, landowners, and investors have the confidence to make plans for future decades.

ConclusionBroad brush strokes

The best time to plant a tree was twenty years ago. The next best time is now.-Anonymous.

These are only the broad brushstrokes for a national forest strategy, a glimpse of what “our forest future” might look like. To plant 1.3 million hectares of new forest would put New Zealand on the right footing in regards to climate change, while also creating diverse economic opportunities and reducing a range of environmental costs. By looking at tangible outcomes like this, we go beyond the abstract language of “green growth” to identify the differences we can make.

The challenge of “green growth” is to change the composition of the economy, to transition away from activities that push against ecological constraints, and to grow those activities that don’t exploit endangered resources or do expand our renewable resources. By adjusting the economy in this way, standard economic growth can still be possible.

The focus on future forests brings this clearly into the light, by showing that land-use choices are not between growth and no-growth, but between different kinds of growth. We can have growth through agriculture and growth through forestry, but by bringing these into greater harmony, by weaving farming and forestry together at the local and national level, we create a whole that is greater than its parts, that reduces the costs that are externalised by private landowners but borne by the nation.

But the other key element of green growth is “wellbeing”. This includes economic growth, but it also opens the door to more holistic conceptions of growth, to the aspects of human improvement that don’t yield easily to a price tag. We all know about this, those of us who choose to live in New Zealand, who forego economic opportunities elsewhere because we love the New Zealand way of life: the beaches, the rivers, the mountains, the forests. Many of the benefits of trees are “priceless” in this sense, whether through reducing stress, beautifying local landscapes, providing artistic inspiration, inspiring fond memories, or whatever else. Such benefits don’t appear on balance sheets in any clear-cut way, because even aggregative impacts like reduced reliance on public health involve causal connections that are notoriously difficult to establish. At some point, we don’t need more numbers, we need only political resolve, the conviction and the leadership to set ourselves targets for tree planting, simply because we know that “our forest future” will be a wealthier future in all sorts of determinate and indeterminate ways. We need to shape our economic metrics and our regulatory systems around obvious truths like this, rather than allow our natural assets to be shaped by the externalities and blind spots of narrow measures of national wellbeing.

Fundamentally, all New Zealanders need to think about how to get more trees in the ground. Landowners need to take a second look at slumping hillsides and unvegetated waterways, and explore the avenues available for reforestation. Urban New Zealanders, who lack the land for planting themselves, need to find other ways to support the trees that offset their commerce and food production—through volunteering, crowdfunding, or supporting policies that expand our natural assets. Businesses need to examine their capacity to assist, by supporting local planting and offsetting projects with integrity. And government, at national and local levels, needs to demonstrate leadership: to upscale existing afforestation programmes, to adopt programmes that are succeeding elsewhere, and to find ways to reward existing tree-planting projects to increase their capacity for planting.

The time to get planting is now—and in the process of doing so, we’ll discover what a green economy truly looks like.

Annex

Annex: Forestry in the Emissions Trading Scheme

New Zealand’s Emissions Trading Scheme is a notoriously complicated policy instrument. It has also been notoriously ineffective. Although the reasons for this are complicated, it helps to focus on two broad reasons for failure. First, the price of carbon credits has been too low. Second, the ETS is plagued with regulatory uncertainty.

The Search for a Price on Carbon

The Emissions Trading Scheme is officially described as “New Zealand’s primary response to global climate change.”90 But it is important to remember that the ETS is not an end in itself. It is the means to an end, an instrument in other words, and the success of any instrument has to be measured against an identifiable purpose and function.

For example, the purpose of a hammer is to build things. It does this by fulfilling the function of hitting nails.

The purpose of the ETS, however, is to change behaviour, to encourage society’s transition from a high-emissions economy to a low-emissions economy. It is supposed to fulfil this function by putting a price on greenhouse gas emissions. That is, the ETS is supposed to rearrange our financial incentives so that people are discouraged from releasing greenhouse gases into the atmosphere (by burning coal to create carbon dioxide, for example) and rewarded for returning those gases to a stable form (by transforming carbon dioxide into wood by growing trees, for example).

For a multitude of well-known reasons91, the ETS has largely failed in its function to generate a significant price. It is unsurprising, then, it is also failing in its purpose—to change behaviour—one symptom of which is the failure of our forests to expand.

The price of New Zealand Units (NZUs) started out at $22 per tonne of CO2e in 2010. But it collapsed soon after, reaching a trough in early 2013. At the time of writing, it has lifted to over $13. (See below.)

Price of New Zealand Unit (NZU) in New Zealand Dollars 2010–2015

Source: OMF – www.omf.co.nz

Yet a recent analysis summarises the minimum conditions for stable afforestation like this: “$15 and a solid outlook that the Government isn’t going to interfere.”92 And the higher the carbon price goes, the more trees we can expect to see planted (see Figure 7). Indeed, a 2012 study by Motu predicted that, under a carbon price of NZ$25, we would have 370,000 hectares of new commercial forest by 2030—that’s around a third of the way to our 1.3 million-hectare target.93

Similarly, a 2013 survey of stakeholders found that no one capable of planting trees for carbon credits would do so under $10 per tonne of CO2e.94 Most would do so only if the price was around $15–20.95This is a lost opportunity for economic resilience, especially when milk or other agricultural commodity prices are low, because farm forestry could diversify a farm’s revenue streams.

As for deterring greenhouse gas emissions, two-thirds of emitters said that the ETS had prompted no emission reductions within their company. The carbon price needs to be higher still. If the price of carbon stayed over $20, then 24 per cent of respondents would reduce emissions. If over $25, then 28 per cent of emitters would make reductions.

Given the gap between price and incentives, it should also come as no surprise that greenhouse gas emissions have continued to rise since the ETS was established. Since 2008, when forestry first entered the Scheme, net emissions have risen by over 12 per cent up until 2013. 96

By its own standards of success, the ETS is failing. It isn’t disincentivising land use conversions from forest to dairying. And it isn’t incentivising on-farm forestry, by which farmers could diversify their revenue streams by being paid for the public benefit of carbon sequestration.

Forecast of afforestation at different carbon prices

Note: this data has not been adjusted to account for planting lag-times; for adjusted figures, see Manley (2016). Source: Manley, Bruce. ‘Afforestation Responses to Carbon Price Changes and Market Certainties’. Report Prepared for the Ministry of Primary Industries. Christchurch, NZ: School of Forestry, University of Canterbury, January 2016, p. 17.

A Lack of Credibility

If the world was full of rational economic actors, this could easily be fixed. But the world is full of people—and, for people, rational economic decisions are only part of the parcel.

A lot of New Zealanders feel burned by the ETS. This will be a continuing hindrance for future involvement. People who set aside land for carbon farming or commercial forestry haven’t seen the returns they were made to expect. People who went further, locking up land for the Permanent Forest Sink Initiative, aren’t making enough to maintain their forests adequately, yet can’t revert to more productive land uses because of the covenants they’ve entered.

The ETS has also treated the forestry sector unevenly compared to other sectors. This has been especially disadvantageous for small forest owners.

Forestry was the first sector to enter the scheme in 2008, whereas agriculture is still exempt, with no timetable for inclusion. Moreover, while foresters must offset their emissions fully, other sectors only need to offset half their emissions—while also receiving free allocations of credits. And when the ETS was shut off to cheap foreign carbon credits in 2014, the prohibition fell immediately on forest owners, while other sectors had a whole year to use foreign credits to offset emissions. This allowed them to stockpile NZUs, contributing to the problem of oversupply that hampers the ETS to this day.

Finally, when the ETS went under review in 2011 to address its obvious failures, not only were the review’s conclusions ignored, but those problems were entrenched further. Namely, various transitional measures that were supposed to have been phased out—such as the one-for-two surrender obligations in 2012 and the exclusion of agriculture until 2015—were made indefinite.

At the time of writing, the ETS is under review once again—but this is not enough to inspire confidence. Why expect that any proposed changes will be implemented this time around? More troublingly, why expect that any changes won’t be overturned by ad hoc adjustments in the future?

A 2013 survey of stakeholders signals this distrust. It found that over 80 per cent of ETS stakeholders believed that insufficient regulatory certainty had been provided by the government. Only half were confident that the ETS would continue past 2020.97

Clearly, the Emissions Trading Scheme suffers from a lack of credibility. Its complexity hides its unfairness and its failures from the public. Meanwhile, participants in the ETS have seen too many avoidably poor outcomes to continue believing that those outcomes were entirely unintended. This adds to an already challenging context for forestry, which involves investments that take decades to reach maturity and are vulnerable to natural hazards like fire, disease, and weather events. An unpredictable policy framework, decoupled from its function and purpose, intensifies the uncertainty.

So, we need not only to fix the flaws in our policy instrument, we also need to ensure that the means of the ETS are more closely tied to its ends.

The simplest way to do this is to solve its accountability deficit—that is, to ensure that someone, or some entity, is held accountable for the ETS’s failures to fulfil its function and purpose. This accountability could fall upon any Ministers that have the power to modify the ETS. Alternatively, accountability could fall upon an independent body, in the same way that the Reserve Bank is accountable to defending the integrity of our dollar currency.98 More generally, this renewed accountability could entail an obligation on government to compensate for failures; for example, to plant whatever number of trees are needed to bridge the shortfall between current planting and national targets.

However we parcel this out, the crucial thing is to ensure that a sense of responsibility is restored to the ETS and its outcomes. The focus on complicated policy constructions like the ETS and the Kyoto Protocol has put the shoe on the wrong foot. While it isn’t obvious that we must wipe the slate clean, it is certainly time to shift our focus onto tangible outcomes: “Ask not what forest can do for the ETS, but what the ETS can do for forest!”

Acknowledgements

The author would like to thank everybody— from forest science, from community conservation, from Māori organisations, from business, from government, from councils—who took the time to talk and share their expertise, and especially those who provided feedback on earlier versions of this paper. Thanks also go to Pure Advantage, in particular Phillip Mills, Sir Stephen Tindall and Rob Morrison.

However, the views, opinions, and recommendations expressed in this discussion paper are strictly those of the author. They do not necessarily reflect the views of those interviewed, nor of Pure Advantage or its trustees. Pure Advantage takes no responsibility for any errors or omissions in, or for the correctness of, the information contained in these working papers. This paper is presented with a view to inform and provoke discussion and action.

Caldecott, Ben, Guy Lomax, and Mark Workman. ‘Stranded Carbon Assets and Negative Emissions Technologies’. Working Paper. Oxford: Smith School of Enterprise and the Environment, University of Oxford, February 2015.

Hawksworth, John. ‘Vision 2050: Estimating the Order of Magnitude of Sustainability-Related Business Opportunities in Key Sectors’. Report Prepared for the World Business Council for Sustainable Development (WBCSD). PricewaterhouseCoopers (PwC), February 2010.

Manley, Bruce. ‘Afforestation Responses to Carbon Price Changes and Market Certainties’. Report Prepared for the Ministry of Primary Industries. Christchurch, NZ: School of Forestry, University of Canterbury, January 2016.

———. ‘Deforestation Survey 2014’. Report Prepared for the Ministry of Primary Industries. NZ School of Forestry, University of Canterbury, February 2015.

Manley, Bruce, and Piers Maclaren. ‘Harvested Wood Products in the ETS? What Would Be the Impact?’ New Zealand Journal of Forestry 55, no. 3 (November 2010): 20–26.

McIvor, Ian, Garth Eyles, Grant Douglas, John Dymond, and Michael Marden. ‘Pastoral Hill Slope Erosion in New Zealand and the Role of Poplar and Willow Trees in Its Reduction’. In Soil Erosion Issues in Agriculture, edited by Danilo Godone, 257–78. INTECH Open Access Publisher, 2011.

Ministry for the Environment, and Statistics New Zealand. ‘Environment Aotearoa 2015: Data to 2013’. New Zealand’s Environmental Reporting Series. Wellington, NZ: Ministry for the Environment and Statistics New Zealand, October 2015.

Nana, Garesh, John Boshier, and Amapola Generosa. ‘Preliminary Analysis of the Economic Impact of the New Zealand Bioenergy Strategy’. Report Prepared for Bioenergy Association of New Zealand. Wellington, NZ: BERL Economics, August 2011.

Natural Capital Declaration. ‘Towards Including Natural Resource Risks in Cost of Capital: State of Play and the Way Forward’. Natural Capital Declaration, November 2015.

Vivid Economic and Energy Centre, University of Auckland Business School. ‘Green Growth: Opportunities for New Zealand’. Auckland, New Zealand: New Zealand Green Growth Research Trust, November 2012.

Vivid Economics and Energy Centre & University of Auckland Business School. ‘Green Growth: Opportunities for New Zealand’. Auckland, New Zealand: New Zealand Green Growth Research Trust, November 2012.

Walker, D. P. ‘An Economic Valuation of Bottle Lake Forest Using Both the Travel Cost and Contingent Valuation Methods for Analysis’. Research Project. Christchurch, NZ: School of Forestry, University of Canterbury, 1992.

Ministry for the Environment and Statistics New Zealand, ‘Environment Aotearoa 2015: Data to 2013’, New Zealand’s Environmental Reporting Series (Wellington, NZ: Ministry for the Environment and Statistics New Zealand, October 2015), 80.

Vivid Economic and Energy Centre, University of Auckland Business School, ‘Green Growth: Opportunities for New Zealand’ (Auckland, New Zealand: New Zealand Green Growth Research Trust, November 2012), 6.

Ian McIvor et al., ‘Pastoral Hill Slope Erosion in New Zealand and the Role of Poplar and Willow Trees in Its Reduction’, in Soil Erosion Issues in Agriculture, ed. Danilo Godone (INTECH Open Access Publisher, 2011), 257–78.

This is for a 3% discount rate. To account for disagreement, this sits within a broader range of $11–56 ($NZ17–86.50) per tonne for a 5% and 2.5% discount rate respectively. See the US Environmental Protection Agency website (last accessed 28/1/2016): http://www.epa.gov/climatechange/EPAactivities/economics/scc.html

Using the Ministry of Primary Industries’ look-up tables for a rough estimate, one hectare of Pinus radiata is expected to sequester 863.7 tonnes of CO2e in the 34 years until 2050, or an average of 25.4 tonnes of CO2e per hectare per year. If evenly distributed across the regions, it would take 1,314,961 hectares to generate annual sequestration of 33.4 million tonnes of CO2e.

In a similar vein, Euan Mason of University of Canterbury’s School of Forestry has estimated that New Zealand could completely offset its own greenhouse gas emissions for between 60 and 100 years by planting Pinus radiata on roughly 2.4 million hectares of marginal lands. That’s 9% of our total land area, roughly twice the size of our current plantation forests. See ‘The New Zealand Emissions Trading Scheme: What Has Gone Wrong and What Might We Achieve?’, New Zealand Journal of Forestry 58, no. 2 (August 2013): 35–39. See also Craig Trotter et al., “Afforestation/reforestation of New Zealand Marginal Pasture Lands by Indigenous Shrublands: The Potential for Kyoto Forest Sinks,” Annals of Forest Science 65 (December 2005).

Mark Belton, personal communication, 25th February 2015. Belton assumes 1,600 tonnes of CO2 per hectare over 50 years, which at 1.32 million hectares amounts to 2.11 billion tonnes over fifty years.

Ben Caldecott, Guy Lomax, and Mark Workman, ‘Stranded Carbon Assets and Negative Emissions Technologies’, Working Paper (Oxford: Smith School of Enterprise and the Environment, University of Oxford, February 2015), 32.

Vivid Economics and Energy Centre & University of Auckland Business School, ‘Green Growth: Opportunities for New Zealand’ (Auckland, New Zealand: New Zealand Green Growth Research Trust, November 2012), 165–6.

John Hawksworth, ‘Vision 2050: Estimating the Order of Magnitude of Sustainability-Related Business Opportunities in Key Sectors’, Report Prepared for the World Business Council for Sustainable Development (WBCSD). (PricewaterhouseCoopers (PwC), February 2010).

For a more detailed survey, see Andrew Goodison et al., ‘WoodScape Study—Technologies and Markets’, Report Prepared for Wood Council of New Zealand (Woodco) (Rotorua, NZ: Scion, February 2013).

The challenges to be overcome to fulfil the Woodco plan include: “a combination of efficiency gains in mills (especially those producing solid wood products), modernisation of building standards to incorporate engineered wood products, increased returns from sawmill residues and lower quality (A & K grade) logs, and much improved information flows and integration across the forest industry value chain. There are other challenges to meet too: the safety of forestry workers needs to be assured, deforestation arrested, log supply security improved, market access and trade terms for wood improved for wood products, the dependence on China reduced, and industry investment in innovation (particularly in wood processing) needs to more than double if the transformational elements of its Woodco strategy are to be achieved. In addition, further rationalisation of old mills will be necessary to improve scale, productivity and specialisation.” Scion, ‘Prosperity from Trees: Statement of Corporate Intent 2014–2019’, 4.

Currently, there are efforts to develop long-term strategy through the Forest Policy Project, which is aligned with the New Zealand Institute of Forestry (NZIF) but draws on a wider pool of forestry experts. This is a praiseworthy initiative and its conclusions should be keenly anticipated. However, despite the NZIF’s efforts, the government is not involved, which raises uncertainty over whether the project’s recommendations could secure regulatory support. See ‘Claim Govt Won’t Develop Long-Term Forestry Policy’, Radio New Zealand, 10th August 2015 (last accessed 11th March 2016): http://www.radionz.co.nz/news/rural/280983/claim-govt-won’t-develop-long-term-forestry-policy

There is one other ingredient: knowledge. This improves the success, as well as the uptake, of tree-planting. Although the importance of knowledge cannot be underestimated, let’s focus for now on the basic logistics.

In 2015, the Chief Executive for the Forest Owners Association, David Rhodes, announced in a media release that: “The Ministers of Climate Change and Primary Industries now need to sit down with the whole of Primary Sector leadership and iwi, and admit ‘we have a problem’. Planting more forests and being more creative with forest waste offers the best short term solution for meeting our international [climate change] commitments. There are upwards of 1 million hectares of hill country that could be planted in trees. This would provide major benefits in terms of erosion control and improved water quality, as well as balancing the nation’s carbon budget.” See “ETS crisis meeting called for”, 12 February 2015, Media Release (last accessed 28/1/2016): http://www.nzfoa.org.nz/news/foa-news/foa-media-releases-2015/1447-311014foanews-3

See the Ministry for the Environment’s Climate Change Information website (last accessed January 8th 2016): <https://www.climatechange.govt.nz/emissions-trading-scheme/about/>

Bruce Manley, ‘Afforestation Responses to Carbon Price Changes and Market Certainties’, Report Prepared for the Ministry of Primary Industries (Christchurch, NZ: School of Forestry, University of Canterbury, January 2016), 16.

Luth Richter and Chambers, ‘Reflections and Outlook for the New Zealand ETS: Must Uncertain Times Mean Uncertain Measures?’, 61.

This is supported by research; for example, see Craig Trotter et al., ‘Afforestation/reforestation of New Zealand Marginal Pasture Lands by Indigenous Shrublands: The Potential for Kyoto Forest Sinks’, Annals of Forest Science 65 (December 2005): 865–71; Luth Richter and Chambers, ‘Reflections and Outlook for the New Zealand ETS: Must Uncertain Times Mean Uncertain Measures?’; Bruce Manley, ‘Afforestation Responses to Carbon Price Changes and Market Certainties’, Report Prepared for the Ministry of Primary Industries (Christchurch, NZ: School of Forestry, University of Canterbury, January 2016).

Luth Richter and Chambers, ‘Reflections and Outlook for the New Zealand ETS: Must Uncertain Times Mean Uncertain Measures?’, 61.

Mason, ‘The New Zealand Emissions Trading Scheme: What Has Gone Wrong and What Might We Achieve?’, 39.

About the author

Dr David Hall

David Hall is Senior Researcher at The Policy Observatory at AUT. He has a D.Phil in Politics from the University of Oxford and has written for the New Zealand Listener, The Journal for Urgent Writing, and the BWB Text series (forthcoming).

Agree. Appropriateness within local contexts is essential. In some areas trees and forests are not necessarily desirable. However, for most of NZ they are. But need to ensure that the pathways to the optimal/ideal long-term outcomes are incentivised above the less sophisticated options.

Thanks for the comment Di. This is precisely the kind of conversation that we need to be having, about which trees are best in light of what we want. That’s why I called for “appropriate diversification”, where “appropriate” stands some sort of responsiveness to the needs and preferences of landowners and surrounding communities. Because so much of the target land is privately owned, and because the impacts of tree planting (as you suggest) carry over the fence line, it’ll be crucial to take those preferences into consideration in order to persuade people to plant. Trade-offs are required—and to my mind, climate policy shouldn’t be immune to trade-offs against cultural values and other environmental demands like biodiversity. Accordingly, I don’t think that “our forest future” will be a monoculture of Pinus radiata. It’ll be a more diverse forest that reflects our local preferences.

Di Lucas has it completely wrong. Wildings are Mother Nature’s response to decades of burning and overgrazing that has left vast tracts land utterly impoverished in economic, ecological and environmental terms.

So the spread of wildings is the symptom of these abuses; wildings are also the cure for that impoverishment as these trees restore the soil structure, improve fertility, harbour native wildlife, improve water quality and reduce erosion. These forests provide a succession pathway back to the original forest cover. These trees are not ugly as they grace some of the most beautiful landscapes on earth.

With a functioning ETS, DoC could produce more money than its entire budget by allowing the expansion of the wilding estate in what could be the biggest native forest restoration project since the Taupo eruption. It is time for a rethink about the place of wildings.

Thanks for your comment Owen. I’m also really interested in this idea of exotics as part of transitional regimes. I’ve talked to conservation groups, as well as groups converting pine forests into native forests, who use existing pine stands strategically as shelter and intermediate erosion control. More broadly, though, I guess I would come back to the local, back to what’s best for each specific location we’re talking about. In the cases I mention, the pines are playing a specific role; but there are cases in Otago and elsewhere where the pines are intervening on native tussock ecosystems that were once free from trees. It seems to me, given the specifics of these locations, there’s a case for keeping them free from wildings. But these are the sorts of choices and trade-offs we so desperately need a national discussion about – so thanks again for your input!

“Natural Landscape Costs” does this mean the desire to gaze upon tussock land? Mat Mcglone has pointed out that these “views” are human made.
It’s seems bizarre that lottery funds are used for helicopters to spray herbicide triclopyr butoxy-ethyl ester on Pines which have self-planted.

Alan Mark, May17.
While afforestation is important for New Zealand, I agree with Di Lucas that the wilding conifer issue cannot be overlooked; it is now considered to be a National Issue in terms of unwanted spread into the uplands of this country where it is seriously impacting on many heritage values: landscapes, recreation, indigenous biodiversity, water production (the Glendhu paired catchment study on the Lammerlaw Range of the eastern Otago uplands has shown a 41% reduction in yield after 22 years compared with the adjacent snow tussock grassland), and future options for land use. Wilding stands no longer qualify for carbon credits. The potential for wilding spread should be assessed ahead of any plantings, as an aspect of the planning phase. Had this been done earlier we might have avoided the >$12 million estimated cost of removing wildings from the 80,000ha infested uplands, down-wind from the 250 ha of pines planted between the 1960s and 1980s for erosion control (now considered ineffective) on Mid Dome in northern Southland and elsewhere.

I struggle to couple this fear of wildings with the necessary urgency of our current situation. The science tells us we are literally staring down the barrel of global catastrophe – the main solution being to shift to low carbon emissions / increase the absorption of carbon. Ensuring low carbon emissions is an energy issue. Absorbing carbon is a tree issue – and we must get / leave as many trees in the ground as possible at this time. We’re all in this together – we need to leave our adversarial motives behind and be pragmatic.